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Piper Jaffray analyst Gene Munster believes that Apple’s strong showing on Amazon.com is an indication that the iPod shows no signs of slowing down. Munster notes that iPod models hold the top 10 spots on Amazon’s Top Sellers list for MP3 players.

“We believe that the iPod is continuing to gain traction in the September quarter as evidenced by the number of iPods included on the Amazon Top Seller List for portable MP3 players and All Electronics,” Munster wrote in a research note obtained by iLounge.

Toshiba today announced the availability of its first hard drive based on perpendicular magnetic recording (PMR), a new technology that increases the amount of data a drive can hold. The new MK4007GAL 1.8-inch PMR drive can store 40GB of data on a single platter, making it possible for thinner portable devices with larger capacity.

Toshiba, which makes the hard drives found in current iPods, hinted that future gadgets will take advantage of the new innovation, noting that an 80GB version is on the way. “The addition of PMR technology will increase capacity options for product designs beyond those currently on the market today, especially as Toshiba introduces an 80GB 1.8-inch HDD with PMR later this year,” the company said.

“The iPod Shuffle Fan Book is the ultimate written companion for Shuffle owners,” says O’Reilly. “Learn how to master the art of shuffling: discover and create custom playlists, share and publish with iMix, and burn playlists on CDs. Beautifully designed in a colorful, compact format, this handy reference book is a must have for shufflers everywhere.”

Apple may have lost its attempt to patent the iPod software interface because long-time rival Microsoft had already filed a similar application. Bloomberg News reports that Microsoft’s patent application was filed with the U.S. Patent & Trademark Office five months before Apple’s request, which was rejected last month.

“Apple plans to appeal the decision to ensure it won’t be forced to pay royalties to Microsoft on every iPod sale,” Bloomberg reports. “The decision could be a setback for Apple, which is also facing increased competition from Microsoft, which makes software for rival music players, and other companies that want to take market share.”

Apple spokeswoman Natalie Kerris said that Apple will continue to pursue the iPod patent. “Apple invented and publicly released the iPod interface before the Microsoft patent application cited by the examiner was filed,

Microsoft says that the iPod will face increased competition from new portable devices before this year’s holiday shopping season. The company is helping electronics makers such as Philips, Samsung and Creative Technology design and test digital music players that will take direct aim at the iPod.

“Come this fall there is going to be a number of devices that get close to competing with Apple’s iPod,” said Erik Huggers, the head of Microsoft’s Digital Media Division. By the second quarter of next year “there is going to be a whole lineup of products that can compete with Apple in industrial design, usability, functionality and features.”

Jupiter Research analyst Michael Gartenberg, however, says Microsoft has a steep uphill battle. “It’s going to take a lot to dethrone Apple,” said Gartenberg. “Apple won’t sit on its laurels and I expect we’ll see another iteration of the iPod for the holiday. Unless Microsoft is really willing to spend the time and effort to get behind a player or a select group of players, it’s not going to happen.”

“If Apple decides to commence litigation against us in order to prevent interoperation with its products, we may be forced to spend money defending their legal challenge, which could harm our operating results,” the company said in an SEC filing this week. “Although we believe our Harmony technology is legal, there is no assurance that a court would agree with our position.”

Real also said Apple will mostly likely “continue to modify its technology to break the interoperability that Harmony provides to consumers” and that it “may no longer work with Apple’s products, which could harm our business and reputation, or we may be forced to incur additional development costs to refine Harmony to make it interoperate again.”

iPodSubwayMaps.com is a website featuring subway maps for major cities scaled specifically for viewing on color screen iPods. The site currently has maps for New York City, Washington DC, Boston, and Hong Kong.

“Thanks to a favorite site of mine, Lifehacker.com, “I came up with the idea of sticking subway maps onto my iPod photo,” says creator Bill Bright. “By chopping up sections of the New York City MTA subway map into 220x176 pixel sections, I was able to carry a complete New York City subway map in my pocket at all times! Hopefully these will be just as helpful for you as they are to me. Soon I’ll be adding in an infrastructure which will allow this site to be more community-based—where you will be able to upload, download and rate user-submitted maps.”

Following a lengthy attempt of nearly three years, Apple has reportedly failed to patent the software interface of the iPod.

“The company’s patent application, which lists Apple VP Jeff Robbin and Apple CEO Steve Jobs as two of its primary inventors, received a final rejection last month from the United States Patent and Trademark Office,” reports AppleInsider. “Standing in Apple’s way appears to be a prior filing by inventor John Platt, who submitted a patent application for a similar software design for a portable device in May of 2002—just five months before Robbin submitted his claims on behalf of Apple.”

Platt’s application describes his invention as a system that “generates playlists for a library collection of media items via selecting a plurality of seed items, at least one which is an undesirable seed item,” according to the Apple enthusiast site. “The process by which the iPod’s software displays its own menu-based interface is very similar to the process Platt’s filing goes on to describe.”

“Apple is pleased that the Supreme Court of Canada let stand a lower court ruling that blank media levies on iPods are invalid, and will shortly announce a claims process so consumers can request a refund for the levies they paid,” Apple said in a statement.

Late last month, the Supreme Court of Canada refused to hear any further arguments over the levy, ending a dispute over the so-called iPod tax, which has collected approximately $4 million in total.

The Canadian Private Copying Collective (CPCC) has collected a tax on MP3 players since December 2003 on behalf of musicians and record companies. The organization was forced to stop charging the levy in December 2004 by the Canadian Federal Court.

Following meetings last week with digital music companies such as Apple and RealNetworks, American Technology Research analyst Shaw Wu said he is “more convinced than ever that Apple has a substantial lead and advantage” over competitors.

In a research report obtained by iLounge, Wu said that the tightly integrated combination of the iPod, iTunes and iTunes Music Store shows no sign of giving up ground to competing companies and formats. “This is despite competitive efforts over the past 2-3 years and continued efforts to erode its dominance,” he said.

“Progress is being made by the Windows Media camp, but coordination and integration are proving difficult because of the many vendors involved including systems, semiconductor, software, content, and service providers, with their various agendas and diverse geographies,” Wu said.

Wu also said that Apple could introduce more than just new iPods at the Apple Expo this September. “We believe Apple could use the upcoming keynote by Steve Jobs at the Apple Expo 2005 event in Paris to make a significant announcement beyond just new iPods,” Wu said. “We believe this could be new markets including music subscriptions and video and the ever-elusive Motorola iTunes cell phone.”

Earth VideoWorks has announced the release of iCandy, a new product for color screen iPods that offers more than 40 slideshows with over 1200 unique pictures of sunsets, wildflowers, forests, beaches, contemporary art, and more. iCandy also comes with 500 kaleidoscope images.

“Earth VideoWorks has been publishing fine art and nature DVDs for over three years, and has an extensive digital photo library of over 25,000 images,” says the company. “These same images are now available in slideshows for iPod Photo owners!”

“Aiming to curb piracy, labels like Sony BMG, which released both records, are rolling out copy-protected albums in the United States, which let users make three exact duplicates of a CD, and store files on a PC in Microsoft Corp.‘s Windows Media format,” reports Reuters. “But the copy-protection bars users from importing music onto iPods since Apple’s Fairplay software is incompatible with Windows.”

The news agency notes that about a third of the 252 customer reviews of the new Foo Fighter CD this week on Amazon complained about the protection. “This CD has a copy protection scheme that makes it totally useless to 30 million iPod owners,” wrote one reviewer. “How could a band be so stupid as to alienate such a huge percentage of their fans?”

Record executives are continuing talks with Apple to make the CDs compatible with iPods, and point out that they have released versions of the albums on Apple’s iTunes Music Store for iPod owners. “That appeased some iPod users, but others are still angry because they like to physically own a disc before importing it to iPods,” said Reuters.

American Technology Research analyst Shaw Wu said that both Apple and the record companies would benefit if they reach an agreement on the copy protection. “Apple’s the leader in digital music. It doesn’t make sense to release too many copy-protected CDs if they’re incompatible with iPods. But Apple could also be at risk if these CDs keep selling well,” he said.

A higher capacity iPod shuffle and color screen iPod mini are both likely to be introduced this year, though a video iPod isn’t expected before the end of 2005, according to one Wall Street analyst. In a research note obtained by iLounge, Piper Jaffray senior analyst Gene Munster offered an overview of potential new Apple products, including his speculation on the future iPod line.

Munster said he expects a higher capacity iPod shuffle to debut before the end of 2005, noting that Apple Expo in Paris at the end of September will likely be the venue for its introduction. “Comments from iPod supplier PortalPlayer seem to indicate that there will be some form of new flash-based device in the market toward the end of the Sep-05 quarter,” Munster said. “We believe this is likely a high capacity shuffle or another new flash-based iPod.”

Munster said a much anticipated color screen iPod mini is likely to be introduced this year and could also debut at Apple Expo in Paris. “We believe that this is a natural extension of the existing 4GB/6GB mini and given Apple’s move to color on the 20GB iPod, we would not be surprised to see the company add a color screen to the mini,” he said. “In our view, a color screen iPod mini would be a home-run product for Apple in the upcoming holiday season.”

Finally, Munster said that a video iPod is unlikely anytime soon. “While speculation regarding the launch of a video iPod within the next 2-3 quarters is growing, we do not expect a video iPod within the next 12 months,” Munster said. “Based on comments from the company regarding the portable media center market and the current lack of significant consumer interest for feature film downloading, we believe Apple will wait at least 12 months—until the market is ready for such a product.”

Alongside the Japanese iTunes Music Store and Abkco announcements, Apple today also said that Nissan, Mazda and Daihatsu have joined other car makers in Japan to add iPod integration to their 2006 model lines. The new companies join BMW, MINI, smart and Alfa Romeo and others.

“We’re delighted to have such a wide variety of car companies in Japan offering iPod integration,

While advertisers struggle to reach consumers who have abandoned traditional radio in favor of their iPod, Apple says it has no plans to allow commercials on its device or iTunes.

“We have gone out of our way to not take advantage of advertising opportunities,” said Greg Joswiak, vice president of iPod product marketing. “We don’t think it’s part of the experience we want to give.”

Except for a handful of podcasts, industry experts believe there’s little opportunity to place ads on devices such as the iPod.

“People are using an iPod because they want to choose the music they listen to,” said Craig Davis, chief creative officer of WPP ad agency JWT Worldwide. “To interrupt and intrude on that with advertising would be pretty unwelcome.”

Hewlett-Packard has decided to stop reselling Apple’s line of iPods, the Wall Street Journal confirmed Friday [paid sub. req.]. HP spokesman Ross Camp told the paper that “the iPod doesn’t fit in with our digital entertainment strategy,” and said the company will quit selling the iPod at end of September.

“The deal between the two companies, which compete against each other in the PC market, was originally viewed as a major step for both companies, but the breakdown of the partnership isn’t likely to be a big loss for either side,” The Journal reports. “H-P on average accounted for only about 5% of iPod sales, which totaled about 6.2 million of the devices, worth more than $1.1 billion in revenue, for Apple last quarter.”

Camp told CNET News.com that HP’s “current plan” is to continue including Apple’s iTunes on its desktop and notebooks like it has done since 2004. The HP representative also said that under the terms of the partnership with Apple, HP cannot develop or market a rival digital music player until August 2006.

Apple and HP first announced their partnership in January 2004 at the Consumer Electronics Show in Las Vegas. HP started selling iPods in August 2004, then later added the iPod mini and more recently the iPod shuffle to its HP-branded line.

In a research note discussing Portal Player’s second quarter financial results, Wu wrote: “We believe new iPods including color iPod minis, higher capacity flash, and a video-capable iPod will not likely ship until the October timeframe in the December quarter.”

Wu said he expects Apple to ship 7.1 million iPods this quarter, 3.1 million of which will be iPod shuffles. He also believes that Portal Player has “secured the design win in a new 2GB iPod mini using flash” and that Apple will discontinue its 4GB iPod mini.

iPod chip maker PortalPlayer said it expects to see “significant demand” in the second half of the year for “exciting new models” from its partners, hinting that Apple does indeed have at least one new iPod coming this Fall. Analysts believe that since more than 90% of PortalPlayer’s sales come from Apple, the company is forecasting upcoming demand for a new iPod.

“We have completed the design win activity for our customers’ exciting new models intended to ship in the second half of 2005,” PortalPlayer CEO Gary Johnson said. “In addition, we worked with the supply chain to prepare our operations for significant demand in the second half of the year.” Johnson went on to say that his company is “excited about the upcoming back-to-school and holiday season and believe we are very well positioned for significant growth in the second half of the year.”

Johnson also said that PortalPlayer will soon benefit from its flash-based designs and wireless technologies. The company believes that “market demand for high-capacity flash players (1GB or greater) has accelerated.” Johnson also noted that PortaPlayer “accelerated its investment in innovative wireless technologies that we believe will help fuel our growth in 2006 and beyond.”

The software giant has taken rather large steps recently to persuade Hollywood that it is the right company to lead the next wave of digital media. Microsoft has already made pacts with Time Warner, Walt Disney Co. and News Corp., the Times reports.

Microsoft chairman Bill Gates says he vows not to play the victim in “Son of iPod.” After being humbled by Apple’s success with digital music, “we’re really having to work more closely with partners in the hardware industry and content industry, to really think through the whole end-to-end experience and make it better,” Gates said. “That’s where we’ve done our mea culpa. We are fixing that.”

The Times reports, however, that content creators “may stand pat, place their bets with multiple technology partners or choose someone other than Gates.” The paper says that “few in Hollywood would be shocked to see Apple founder Steve Jobs pull another rabbit out of his hat, unveiling a perfectly thought-out system for moving paid video to computers and portable devices.”